Filed under: Personal finance, Housing

A CNNMoney piece looks at the rise of payday lending in Ohio, aided (or perhaps exacerbated is a better word) by the subprime debacle that has given many home owners with toxic mortgages difficulty making their payments.

While people probably aren’t using payday loans directly to pay their mortgages, that’s the net result: Soaring monthly payments are eating up a big chunk of their paychecks, and they’re resorting to payday lending to pay for other expenses.

The problem with that is that, on an annualized basis, interest rates on payday loans can end up being well over 400%. However the lenders counter, not wrongly, that the loans are not meant to be used for a year so quoting an APR is meaningless — They charge a service fee for a short-term cash advance.

Continue reading Taking out a payday loan to pay the mortage — that’s stupid!

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This entry was posted on Saturday, December 15th, 2007 at 9:36 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.